New federal regulations improve oil and gas activity

In a move that will enhance the nation's energy independence and security, the Bureau of Land Management today published final revised regulations governing oil and gas activity on the public lands.

The rule published in today's Federal Register updates the set of regulations known as onshore oil and gas order Number 1. The order establishes the requirements that companies must meet to obtain approval for oil and gas exploration and development on all Federal and Indian lands (except those of the Osage Tribe).

"Updating Onshore Order Number 1 reflects the BLM's continuing commitment to managing the public lands for multiple uses while also protecting the health and diversity of the resources they hold," said acting BLM Director Jim Hughes.

"The revised order will advance the goal of the President's National Energy Policy as reaffirmed in the Energy Policy Act of 2005 -developing the abundant energy supplies on public lands in an environmentally sound manner."

The revised order includes updates required by the Energy Policy Act, the 1987 Federal Onshore Oil and Gas Leasing Reform Act, legal opinions, court cases, and changes in policy and procedure issued since the order was last updated in October 1983.

Major changes involve procedures for processing applications for permits to drill (APDs), the use of best management practices (BMPs) in lease development, and regulations and procedures for operating in split estate situations, where privately owned surface overlies federally owned minerals.

The revised order contains a clear definition of a "complete" APD package that puts into regulation the definition already commonly used in many BLM field offices. It also codifies the current BLM practice requiring a joint onsite inspection by the BLM, the FS (if appropriate), and the operator before an APD is considered complete. In addition, the latest version of the order ensures that APD processing will occur according to the timeframes contained in Section 366 of the Energy Policy Act.

The Final Rule encourages operators to use environmental best management practices when developing their APDs, as is current BLM policy.

The updated order further clarifies that BMPs may be included as conditions of approval in drilling permits.

Because a number of conditions, regulations, policies, procedures, and requirements have changed in the 20 years since the last revision, the Final Rule also reorganizes the order so that permit processing requirements and time frames are now found in one section.

Regulations and procedures used when operating in split estate situations are also clarified in the Final Rule, which requires operators to make good faith efforts to reach surface access agreements with private surface owners.

Where a good faith effort fails and no surface agreement can be reached, the revised Order provides for the posting of a bond to protect against damages to the surface as allowed in the statute that reserved the mineral rights to the federal government.

In addition, the Final Rule provides opportunities for private surface owners to participate in onsite inspection meetings.

This provision responds to comments gathered from some surface owners during a series of listening sessions on split estate issues, held in four western cities and Washington D.C. in 2006.

The revised order also clarifies that split estate lands where the surface is in Indian ownership will be subject to the same provisions as situations where the surface is privately owned.

The revised Order also incorporates a 1988 opinion by the department of interior solicitor that on split estate lands, the BLM shall comply with cultural and endangered species regulations in essentially the same way it does when the surface is Federally owned.

A more recent solicitor's opinion, from 2004, allows clarification in the updated rule that the BLM has authority to require additional bonding for off-lease facilities that are necessary to develop a lease, such as impoundments for water produced from coalbed natural gas wells.